HP, After Oracle Ruling, Still Must Decide Future of Itanium Servers
Hewlett-Packard executives, fresh off the win in their legal dispute with Oracle over Intels Itanium processor, now must make some decisions about the future of their high-end server platforms and their reliance on the controversial chip.
A California judge ruled Aug. 1 that a legal settlement negotiated by the two companies in 2010 was a binding contract that obligated Oracle to continue porting its enterprise software to HPs Itanium-based high-end servers, including its Integrity and NonStop systems. Judge James P. Kleinberg of the Santa Clara County Superior Court ruled in HPs favor in every key point in the case, and ordered Oracle to continue developing its software for the Itanium platform and to do so at no charge to HP.
The case now will go to the penalty phase, where a jury will decide what Oracle owes HP. Oracle officials have promised to appeal Kleinbergs decision.
However, while HP is celebrating the ruling, the trial in the long run may have done further damage to an already-controversial processor platform and lessened the confidence customers may have in it, according to Joe Clabby, principal analyst with Clabby Associates. Evidence presented in the trial showed that in recent years, Intel executives had considered ending development of Itanium, and that what apparently is keeping the platform moving forward are annual payments from HP that have totaled more than $600 million already.
There is so much fear, uncertainty and doubt raised about Itanium, Clabby told eWEEK, adding that while HP officials sit there happy as heck [about the ruling], so much damage to Itanium has been done. ¦ HP may have won the battle, but they probably lost the war.
Oracle executives in 2011 announced that they would no longer develop their hardware to run on Itanium, saying that Intel engineers had told them that the chip maker intended to end work on Itanium and focus all of its efforts instead on its x86-based Xeon server chips.
The decision drew sharp responses from both Intel and HP executives, who said that the Itanium road map was set at least through the end of the decade. HP officials also said Oracles decision was more about trying to drive customers to its competing SPARC/Solaris hardware platform, which Oracle inherited when it bought Sun Microsystems in 2010.
Analysts agreed. In an email to eWEEK, Rob Enderle, principal analyst with The Enderle Group, said that Oracles decision has nothing to do with Itanium or its capabilities, this was simply Oracle trying to come up with an excuse to terminate the contract for cause. Oracle will still want customers to favor Oracle hardware with Oracle software.
HP sued, claiming that a paragraph in another legal settlement in 2010 between the two companies over Oracles hiring of ex-HP CEO Mark Hurd was a binding contract that obligated Oracle to continue to support all of the products used by the more than 140,000 joint customers, including the Itanium-based systems. Oracle executives argued that the paragraph did not rise to the level of a binding contract, and accused HP of misleading them and their customers about the viability of Itanium.
They argued that issue further in court, pointing to documents that indicated that Intel officials had considered dumping Itanium and that it was only HPs annual payments that kept the platform alive. HP is by far the largest buyer of Itanium processors. Kleinberg ruled in favor of HP, saying the decision by Oracle to end Itanium supportwithout prior notice to HPviolated a contract and was not in keeping with how the two longtime partners have worked together in the past.
However, while Oraclebarring the decision being overturned on appealmay be obligated to continue porting its software to HPs Itanium servers until HP stops selling them, a key question is whether customers, after the ruling, still have any confidence in Itaniums future, Clabby said.
He noted that other software vendorsparticularly Microsoft, Red Hat and VMwarealready have stopped developing products for Itanium, weakening an already weak ecosystem around the platform. The ruling did little to address that, he said.
When youve got a vendor forced to put their stuff on Itanium, have you really fixed the ecosystem? Clabby asked.
The issue of the annual payments to Intel to keep Itanium alive also has to be addressed, he said. Can HP really, at this junctiontheyre laying off 27,000 peopleafford to be shelling out hundreds of millions of dollars for [an Itanium platform] that a lot of people see as suspect?
HP is looking to converge platforms on its high-end systems as part of what it calls Project Odyssey, an initiative introduced in November 2011. Part of the plan is to unify the companys Itanium and x86 server platforms, essentially enabling customers to run Itanium- and Xeon-based servers in the same enclosure, running everything from HPs HP-UX and OpenVMS operating systems to Windows and Linux.
Analysts have generally supported the strategy, noting that its similar to what IBM has already done with its mainframe, Power and x86 platforms. However, thats one of the problems, Clabby said in a June reportIBM already has been doing this since 2010, giving businesses a clear alternative. He has argued that HPs best path forward would be to drop Itanium and become a pure x86 server vendor.
Other analysts have more warmly embraced the Odyssey strategy. IDC analyst Matt Eastwood, in a report right after it was announced in 2011, said the HP plan has a number of positive aspects and addresses just changing data center trends as infrastructure convergence, shifting computing needs for mission-critical workloads and platform migration demands.
HP has a good story to tell regarding the convergence of compute, networking, storage and systems management infrastructures, and the capital and operational expense benefits associated with unifying these platforms, Eastwood wrote at the time.
However, he noted two challenges: Intels continued development of Xeon as a processor platform that can handle increasing numbers of mission-critical applicationsnoting the release last year of Xeon E7and Intels reluctance to provide many details about the Itanium road map beyond Kittson, which is due out in 2014 or 2015.
In his email to eWEEK, Enderle said that what HP asks for from Oracle in the penalty phase could be an indication of HPs intentions regarding Itanium. HP executives have blamed Oracles decision for much of the drop in revenue for its Business Critical Systems Group. He said HP has too many platforms and that some may be discontinued, but added that Itanium has at least five more years of life, and that such systems tend to come with at least 10 years of support that will continue after the platform becomes obsolete.
However, HP officials could argue that Oracle, with its decision, forced HP to start moving away from Itanium earlier than intended, and will ask for a big payment from Oracle to pay for the transition. At the same time, HP could try to force Oracle to support the program deep into the future.
Well have a better idea when we see how HP plays the penalty phase, Enderle wrote. If they go for a huge one-time payment, they are more likely to migrate folks off Itanium early. If they go for some kind of sustained funding tied to Itanium, [they are] more likely to extend the platform longer.